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Gas Row
Anil fires fresh salvo at Oil Ministry

Anil AmbaniMumbai, July 28
Industrialist Anil Ambani today dared
the Petroleum Ministry to take back
the ownership of gas fields from RIL
if it seriously believed that terms of
the contract were violated by Mukesh
Ambani-led firm, which he alleged was
wanting to make a super-profit of
Rs 50,000 crore.

Monetary Policy
Key rates unchanged
Mumbai, July 28
With concerns over rising inflation, the RBI has decided to
RBI Governor D. Subbarao attends a meeting with bankers in Mumbai on Tuesday.leave key rates unchanged. Announcing the first quarter policy review for Financial Year 2009-10, RBI Governor D Subbarao said the apex bank’s status quo on policy rates would anchor interest rate expectations that could spur investment demand.
RBI Governor D. Subbarao attends a meeting with bankers in Mumbai on Tuesday. — AFP photo


EARLIER STORIES




RPower to raise over Rs 20,000 cr
Mumbai, July 28
Anil Ambani group company Reliance Power plans to raise over Rs 20,000 crore in the current fiscal to finance various projects, including the 4,000 MW Krishnapatnam ultra mega power project (UMPP).

SpiceJet flies out of the red
Mumbai/New Delhi, July 28
A shift in passenger traffic towards economy airlines and improved market share helped no-frills airline SpiceJet to emerge from losses and post a net profit of Rs 26.34 crore during the quarter ended June 30, 2009.

Industry concerned over credit availability
New Delhi, July 28
Since the global economy is projected to contract by 1.4 per cent in 2009 and the domestic credit growth scenario is grim (growth down to 16 per cent from 28 per cent in November 2008) and inflationary pressures on the increase, industry feels that stimulating aggregate demand may be necessary to kickstart the economy.

FM: Divestment only in profit-making PSUs
New Delhi, July 28
The government is considering making the shares of PSUs with high profits public once the market is in good shape. This was stated by Finance Minister Pranab Mukherjee while replying to questions in the Rajya Sabha during question hour.

Andhra to bid for oil, gas blocks in NELP-8
Hyderabad, July 28
The Andhra Pradesh government has decided to bid for exploration of natural gas in the country’s largest-ever auction of oil and natural gas blocks under the eighth edition of the New Exploration Licensing Policy (NELP- VIII) which would commence next month.

Corporate News
BPCL Q1 net profit at Rs 614 cr
Mumbai, July 28
State-run Bharat Petroleum Corporation Ltd today reported a net profit of Rs 614.12 crore for the first quarter ended June 30, 2009.

LPG Diversion
CAG raps Indian Oil Corporation
New Delhi, July 28
As there is a wide gap between the prices of subsidised and commercial LPG, an effective system to curb diversion of domestic LPG for commercial usage is required, stated the report of Comptroller and Auditor General (CAG).

NHPC public offer opens on Aug 7
New Delhi, July 28
Free from political shackles, the government's divestment programme is all set to take off as power utility NHPC today announced sale of equity from August 7 at a price of Rs 30-36 to raise up to Rs 6,048 crore.

 





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Gas Row
Anil fires fresh salvo at Oil Ministry

Reliance Industries chairman Mukesh Ambani arrives at the Rashtrapati Bhavan in New Delhi on Tuesday.
Reliance Industries chairman Mukesh Ambani arrives at the Rashtrapati Bhavan in New Delhi on Tuesday. A Tribune photograph

Mumbai, July 28
Industrialist Anil Ambani today dared the Petroleum Ministry
to take back the ownership of gas fields from RIL if it seriously believed that terms of the contract were violated by Mukesh Ambani-led firm, which he alleged was wanting to make a super-profit of Rs 50,000 crore.

In a scathing attack on the Ministry, Anil told the shareholders of group firm RNRL that "it is evident that the apparently biased stance commenced in 2006, coinciding with the changes in the ministry.

"I'm sure all private companies in India wish that if they make commercial decisions, they wish to get out of, they, too, had a saviour to help bail them out as in the case of RIL." While Murli Deora, whose ministry has sought annulment of the gas supply contract between RIL and RNRL in the Supreme Court, declined to comment, Petroleum Secretary R S Pandey hit back saying that Anil's gas pricing formula would make the country subservient to RIL.

Alleging volte-face by the Petroleum Ministry, Anil said that though it stated in Parliament that it had no role in commercial dispute or in fixing the sale price of the gas, it has now gone to the Supreme Court challenging a commercial contract between two corporate entities.

"The bogey of sovereign ownership is being raised with the sole purpose of attempting to bail out RIL and help them renege on their contractual commitments," he said.

In an uncharacteristically long speech, Anil questioned the Petroleum Ministry's stand that it had gone to the Supreme Court after knowing the full content of the family agreement only from Bombay High Court order, saying it had all relevant details of RIL-RNRL gas deal since 2006.

When contacted, spokesperson of RIL, which Anil Ambani alleged was firing from the Petroleum Ministry's shoulders to renege its contract with NTPC and RNRL, declined to comment saying, "the issue is before the Supreme Court and sub judice" While Anil was addressing company shareholders and appraising them of the developments related to gas supply contract, which according to him was primary asset and contributed to company value, Mukesh Ambani was in New Delhi meeting top government officials and Cabinet minsters.

Commenting on the issues raised by Anil, Petroleum Secretary said: "Full implication of the family MoU (that split Dhirubhai Ambani empire between bothers Mukesh and Anil) were known only after the Bombay High Court recorded the MoU" and the petition in the apex court only sought to declare null and void the part of family agreement that dealt with gas.

Anil, however, alleged that the ministry had also gone against the position taken by the Empowered Group of Ministers, which in September 2007 took full details of RIL-RNRL deal and recognised the rights of the parties, when it recorded that its decisions were without prejudice to RNRL-RIL and NTPC-RIL cases.

He quoted a law ministry circular of November 2008 stating that in all sensitive matters, written submission or affidavit should be filed in the Supreme Court only after the same were vetted by the Department of Legal Affairs, and said that that oil ministry had reportedly not taken the requisite approval.

"Frankly, if the Petroleum Ministry is genuinely aggrieved and if they honestly believe that RIL has violated the terms of PSC (production sharing contract) by allegedly trying to divide the national property, why don't they exercise their powers and terminate the PSC and take back the ownership of gas fields," he said.

As per the PSC, RIL would get Rs 49,500 crore against the government's Rs 500 crore from the initial revenue of Rs 50,000 crore and added that "99 per cent of all revenue and profits will go to RIL and only a measly 1 per cent would accrue to the government", he said. — PTI

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Monetary Policy
Key rates unchanged
Shiv Kumar
Tribune News Service

Mumbai, July 28
With concerns over rising inflation, the RBI has decided to leave key rates unchanged. Announcing the first quarter policy review for Financial Year 2009-10, RBI Governor D Subbarao said the apex bank’s status quo on policy rates would anchor interest rate expectations that could spur investment demand.

Keeping this objective, Subbarao said the RBI was leaving the Cash Reserve Ratio at 5 per cent and the repo and reverse repo rates at 4.75 per cent and 3.25 per cent, respectively.

The RBI has projected inflation at 5 per cent from the 4 per cent forecast earlier. The central bank projects inflation to begin creeping upwards from October this year.

India’s GDP, Subbarao said, is projected to grow to 6 per cent in March 2010 “with an upward bias”. He cited favourable funding conditions for corporates and revival of industrial production as major causes. He, however, said the “uptrend in growth momentum” is unlikely before September and agricultural growth could be hit by delayed monsoons.

The RBI Governor also warned of the uncertain macro scenario."Export demand remains weak. The services sector is sluggish on lagged impact of weak industry growth," the RBI governor said. He was hopeful about government's monetary, fiscal steps boosting domestic demand. "The domestic, external financing environment has improved since H2 FY09.

The business outlook has turned positive. RBI will continue to keep its eye on credit growth in the system," Subbarao said.

According to the RBI, its policy initiatives since mid-September 2008 aimed at providing ample rupee liquidity and ensuring continued flow of credit to all productive sectors has shown results. “These actions have resulted in augmentation of actual/potential liquidity of over Rs 5,61,700 crore. The liquidity situation has remained comfortable since mid-November 2008 as evidenced by the LAF window where the Reserve Bank has been absorbing nearly Rs 1,20,000 crore on a daily average basis during the current financial year,” the RBI Governor said.

Later addressing the media, Subbarao felt that there was scope for banks to reduce lending rates further. "Banks say that the demand for credit is picking up on the back of investment in projects...banks have scope to reduce lending rates," he said. He further added that the feedback he received from bankers indicated that demand for credit from segments like home and retail were picking up.

However, he was wary of uncertainties like erratic monsoons which could hurt the farm sector. Subbarao said there were concerns that the problems of the farm sector could spillover to the general economy as well. Similar concerns exist if exports do not pick up in the coming months. Exports have remained stagnant for the past eight months and could pose risks to the revival of the Indian economy as well.

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RPower to raise over Rs 20,000 cr

Mumbai, July 28
Anil Ambani group company Reliance Power plans to raise over Rs 20,000 crore in the current fiscal to finance various projects, including the 4,000 MW Krishnapatnam ultra mega power project (UMPP).

"We are on course to raise Rs 20,000 crore of debt this fiscal, having made significant progress in getting appraisals and sanctions for our Krishnapatnam UMPP," Reliance Power chairman Anil Ambani told shareholders at the company's annual general meeting held here today.

The company had raised a similar amount of debt in FY'09 as well. "We will continue to focus on identifying and participating in bids (to develop more projects)," he said.

Reliance Power would expedite the commissioning of its projects ahead of schedule, Ambani said, adding that "we are seeking to advance the commissioning of the Sasan project by almost three-years." The power from the Sasan project would be sold to consumers at a levelised tariff of Rs 1.19 per kwh for 25 years, he said.

Reliance Power has bagged three of four contracts for developing UMPPs in the country. "Our present portfolio of over 33,000 MW in the next seven to eight years averages to almost 5,000 MW every year. Of this, we propose to commission nearly 3,000 MW by 2012. The pace of commissioning will pick up considerably after that and we should be on course to bring on-stream the remainder of our thermal projects by the middle of the 12th Plan," Ambani said.

On the Rosa project, Ambani said the 600 MW Phase I of the project (located in Uttar Pradesh) is running ahead of schedule. "We expect to finish it before end-this year." "This means that we will commission the project in less than three years time," he said.

With respect to the implementation of Rosa Phase II, Ambani said that the company expected it to be up and running before the end of the 11th Plan.

On the 4,000 MW Chitrangi project in Madhya Pradesh, Ambani said, "We have secured bid to supply 1,200 MW of power to the Madhya Pradesh Power Trading Company Ltd at a levelised tariff of Rs 2.45 per unit of electricity.

"As for the balance, we will tie-up a portion of the capacity through long-term PPAs while reserving a substantial part for merchant sale." — PTI

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SpiceJet flies out of the red

Mumbai/New Delhi, July 28
A shift in passenger traffic towards economy airlines and improved market share helped no-frills airline SpiceJet to emerge from losses and post a net profit of Rs 26.34 crore during the quarter ended June 30, 2009.

SpiceJet today recorded a net profit of Rs 26.34 crore in the first quarter, while it had a net loss of Rs 129.22 crore in the same quarter of 2008.

The total income stood at Rs 534.41 crore during the quarter as against Rs 483.40 crore in the corresponding period last year. — PTI

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Industry concerned over credit availability
Bhagyashree Pande
Tribune News Service

New Delhi, July 28
Since the global economy is projected to contract by 1.4 per cent in 2009 and the domestic credit growth scenario is grim (growth down to 16 per cent from 28 per cent in November 2008) and inflationary pressures on the increase, industry feels that stimulating aggregate demand may be necessary to kickstart the economy.

Federation of Indian Export Organisations (FIEO) president A Sakthivel said, “There are concerns over revised IMF estimates that indicate contraction in world trade by 12 per cent in 2009 (as against 9 per cent contraction forecast by WTO). This will further compound the challenges for Indian exporters. However, there are domestic concerns also, which will need constant attention by the RBI.”

“Channelising credit growth to make us competitive is a welcome measure. The credit policy provides broad direction much on the lines of the Budget but falls short of any concrete steps,” said Abizer Diwanji, head of financial services, KPMG.

Industry chamber Ficci feels that there are signs of revival in business confidence and some reduction in policy rates at this stage would have helped to provide fillip to corporate investment, thereby boosting economic growth, said Ficci chief Harsh Pati Singhania.

Ensuring flow of credit to the private sector at viable rates is one of its key objectives, said Venu Srinivasan, CII president. “The RBI needs to ensure that this does not lead to crowding out of private sector credit. As credit demand has remained subdued in the first half of 2009-10, it has been possible for the government to borrow large amounts from the market without pushing up interest rates. But as private sector credit demand picks up towards the latter half of the year, the RBI has to ensure that liquidity remains adequate,” he said.

Corporate India is looking up to the banks for easy access to capital at lower costs. There are concerns of expected increase in cost of capital as Central and state governments are going to borrow heavily in the market till March 2010.

The slowdown in industrial growth underlines the need for ensuring that the measures are speedily implemented and closely monitored. PHD Chamber has expressed concern that while the packages have raised aggregate demand, they have led to doubling of the fiscal deficit of the country from 2.7 per cent in 2007-08 to 6.2 per cent of GDP in 2008-09.

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FM: Divestment only in profit-making PSUs
Tribune News Service

New Delhi, July 28
The government is considering making the shares of PSUs with high profits public once the market is in good shape. This was stated by Finance Minister Pranab Mukherjee while replying to questions in the Rajya Sabha during question hour.

He said, "PSUs with high profits are under consideration and as soon as markets are in good shape, we will make them public. We want to gain maximum advantage of the markets, once they get back in shape".

Replying to supplementaries raised by the members, the Finance Minister said the disinvestment policy is an ongoing one as it was in the Common Minimum Programme (CMP) of the previous UPA government also.

The minister said the policy of the government is to develop people-ownership of PSUs while ensuring that government equity does not fall below 51 per cent.

The minister said the government would offer small portions of its shareholding in the Central Public Sector Enterprises to the general public in domestic market while retaining 51 per cent with the government.

The minister also informed the House that PSUs that have received 'Navratna' status are not being considered for disinvestment, while adding that other PSUs are being considered on case-to-case basis.

The FM pointed out that the Disinvestment Commission set up in 1996 had recommended disinvestment of around 88 PSUs.

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Andhra to bid for oil, gas blocks in NELP-8
Tribune News Service

Hyderabad, July 28
The Andhra Pradesh government has decided to bid for exploration of natural gas in the country’s largest-ever auction of oil and natural gas blocks under the eighth edition of the New Exploration Licensing Policy (NELP- VIII) which would commence next month.

This is first time that the state government is getting into oil and gas exploration business. The decision comes against the backdrop of AP’s bitter experience with Reliance Industries which has struck huge gas reserves in the Krishna-Godavari Basin.

Despite massive reserves being found in the state, AP has been unable to get the gas allocation on priority basis even as the Ambani brothers are locked in a bitter legal battle over gas supply.

Vexed with the delay in getting gas allocation from K-G Basin, the Chief Minister Y S Rajasekhara Reddy has directed the officials to work out modalities for bidding for gas fields.

The official sources said the A P Industrial Infrastructure Corporation (APIIC), along with AP Power Generation Corporation (APGenco) would float a joint venture company, on the lines of Gujarat State Petroleum Corporation (GSPC) which had won the bids for exploration of oil and natural gas blocks under NELP- III in 2001- 02 and struck huge quantities natural gas reserves in K-G basin.

The Chief Minister ordered that the process of formation of the JV should be completed in two weeks.

The JV would engage international consultants for the preparation of bid documents. According to estimates, it would require Rs 80 to 100 crore to explore each block.

The government is planning to use the gas pumped from its fields for captive purposes, mostly power generation projects set up by the state-owned utilities.

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Corporate News
BPCL Q1 net profit at Rs 614 cr

Mumbai, July 28
State-run Bharat Petroleum Corporation Ltd today reported a net profit of Rs 614.12 crore for the first quarter ended June 30, 2009.

The company had a net loss of Rs 1,066.7 crore in the same quarter last year, BPCL said in a filing to the Bombay Stock Exchange (BSE).

The total income has decreased to Rs 26,195.6 crore in the latest quarter, against Rs 3,9297.7 crore in the same period last year. Shares of BPCL were trading at Rs 459 on the BSE, up 1.91 per cent from the previous close.

Tata hires KPMG for JLR

Tata Motors has hired KPMG and Roland Berger Strategy Consultants to advice on cost-cutting and cash flow management at Jaguar and Land Rover, the luxury brands it bought last year, according to media reports. According to a report in the Daily Telegraph, the company has appointed advisers KPMG and Roland Berger Strategy Consultants to reduce cost at JLR.

JLR's UK operations suffered a combined net loss of 673 million pounds last year, accounts filed with the Companies House showed.

Tata has spent one billion dollars to keep the struggling brands afloat since the acquisition.

The report said that stabilising sales in India helped the company offset a continuing slump in exports, as the global economic crisis hit its main export markets of South Africa, Turkey and Russia.

HUL profit down

FMCG major Hindustan Unilever Ltd (HUL) today reported a fall of 2.69 per cent in its first quarter net profit at Rs 543.19 crore as against Rs 558.18 crore during the corresponding period last fiscal.

The company, however, reported a growth of 7.77 per cent in its net sales at Rs 4,475.68 crore during the quarter ended June 30, as compared to Rs 4,152.84 crore during the same period last year, HUL said in a statement.

Bharti AXA launches home insurance packages

Bharti AXA General Insurance Company Limited launched its Home and Shop Insurance Products on Tuesday. "Our new home and shop insurance products are affordable as well as offer a host of value-added covers," Bharti AXA GI CEO Dr Amarnath Ananthanarayanan said.

'Smart Plan Householder's Package Policy' and 'Smart Plan Shop Package Policy' are the pre-underwritten products that can be sold at the counter without any hassle of property evaluation and other procedures involved in buying home and shop insurance at a premium rate of Rs 880 (for Rs 2 lakhs) and Rs 910 (for Rs 5 lakhs) respectively.

Grasim Industries Q1 net profit at Rs 1,080 cr

Aditya Birla Group company Grasim Industries today said its consolidated net profit stood at Rs 1,080.03 crore for the first quarter ended June 30, 2009.

The company had a net profit of Rs 671.89 crore in the same quarter last year, Grasim Industries said in a filing to the Bombay Stock Exchange.

"Results for the quarter ended June 2009 are not strictly comparable owing to sale of Sponge Iron unit effective from May 22, 2009," the company said in a filing. Total operating income stood at Rs 5,122 crore in the latest quarter against Rs 4,448 crore in the same period last year. — PTI

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LPG Diversion
CAG raps Indian Oil Corporation
Tribune News Service

New Delhi, July 28
As there is a wide gap between the prices of subsidised and commercial LPG, an effective system to curb diversion of domestic LPG for commercial usage is required, stated the report of Comptroller and Auditor General (CAG).

The report tabled in the Parliament today rapped the Indian Oil Corp for its inability to exercise control in the absence of adequate customer database. The CAG report has stated that absence of such database has led to issuance of multiple and fake connections.

Besides, the CAG has rapped the company towards lenient approach in penalising dealers who are undisciplined in distributing cylinders to consumers. The CAG has stated that while releasing a commercial connection, the company enquired about the consumers’ yearly consumption, but the same was not being followed in respect of domestic consumers.

In case of domestic LPG connection, details as to family size and consumption pattern of the domestic users was also not collected by the company. In the absence of such information it was found that distributors were found issuing three refills at a time to a single consumer.

Audit analysis revealed that irregularities noticed by the company during refill audits increased from 546 in 2005-06 to 905 in 2007-08. Similarly, cylinders found under diversion for commercial use increased from 38,330 during 2005-06 to 50,640 during 2007-08.

The CAG has stated that even though the company has imposed major and minor penalties in all cases, the increasing number of irregularities is indicative of inadequacy of the penal provisions of the guidelines to deter the distributors from committing such irregularities.

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NHPC public offer opens on Aug 7

New Delhi, July 28
Free from political shackles, the government's divestment programme is all set to take off as power utility NHPC today announced sale of equity from August 7 at a price of Rs 30-36 to raise up to Rs 6,048 crore.

"We have decided a price band of Rs 30-36 for the IPO," NHPC Chairman and Managing Director S K Garg said today about the initial public offer that will close on August 11.

This is the first stake sale by a state-run company in 17 months after REC went public in February 2008 to raise over Rs 1,600 crore. In its last tenure, the Manmohan Singh government had put on hold disinvestment in state-owned undertakings in the face of opposition from allies like the DMK and the Left parties.

The sale of five per cent government equity, along with issuance of fresh shares totalling 10 per cent, at the top end of the price band could fetch Rs 6,048 crore. Post-issue, the government equity would come down to 86.36 per cent in the company that could have a valuation of Rs 44,000 crore.

NHPC, among the top 10 companies in terms of investment, would sell 168 crore shares. The funds raised from the IPO would be used for the company's brownfield expansion plans. — PTI

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